Stimulus Package Extends Whistleblower Protections

The American Recovery and Reinvestment Act of 2009 (ARRA), recently signed into law by President Obama, provides for unprecedented levels of investment in infrastructure, energy, and research. While it offers many businesses the prospect of brighter economic days, it is important for businesses who receive those funds to know that it comes with strings attached. Among other things, the ARRA contains sweeping new protections for public and private employees who blow the whistle on gross mismanagement or waste of covered funds, creation of public health or safety risks, or violation of laws or regulations relating to the grant of the funds.

Mendelson, P.C. littler.com 1.888.• info@littler.com A S A P ® The American Recovery and Reinvestment Act of 2009 (ARRA), recently signed into law by President Obama, provides for unprecedented levels of investment in infrastructure, energy, and research. While the government’s outlay of nearly $500 billion in stimulus spending offers many businesses the prospect of brighter economic days, it is important for businesses who receive those funds to know that the ARRA contains sweeping new protections for public and private employees who blow the whistle on gross mismanagement or waste of covered funds, creation of public health or safety risks, or violation of laws or regulations relating to the grant of the funds. What the ARRA Says (and Doesn’t Say) About Protections for Whistleblowers Section 1553 of the ARRA provides that non-federal employers who receive stimulus funds may not retaliate against an employee for providing information that the employee reasonably believes to be evidence of: (1) gross mismanagement of a contract related to covered funds; (2) gross waste of covered funds; (3) dangers to public health or safety related to the use of public funds; (4) an abuse of authority related to the use of covered funds; or (5) a violation of a law, rule, or regulation related to a contract or grant related to covered funds. Non-federal employers include all private employers as well as state and municipal employers. Section 1553 contains many provisions that set it apart from other laws providing protection for whistleblowers. For example, Section 1553 establishes a wide range of agencies, individuals, and courts to whom an employee can report allegations of fraud or abuse, including: the Recovery Accountability and Transparency Board, a state or federal regulatory or law enforcement agency, the employee’s supervisor, a court or grand jury, the head of a federal agency or their representatives, and even a member of Congress (something no other federal whistleblower statute has authorized before). Notably, the employee’s report is considered a protected disclosure even when it is made in the ordinary course of his or her duties. The American Recovery and Reinvestment Act of 2009 (ARRA), recently signed into law by President Obama, provides for unprecedented levels of investment in infrastructure, energy, and research. While it offers many businesses the prospect of brighter economic days, it is important for businesses who receive those funds to know that it comes with strings attached. Among other things, the ARRA contains sweeping new protections for public and private employees who blow the whistle on gross mismanagement or waste of covered funds, creation of public health or safety risks, or violation of laws or regulations relating to the grant of the funds. Stimulus Package Extends Whistleblower Protections to Employees By Gregory C. Keating and Amy E. Mendenhall ® A Timely Analysis of Legal Developments A S A P In This Issue: Package Extends Whistleblower Protections Employees March 2009 Recovery aRnedinvestment Act of 2009 (reAcReRnAtly), into law by President Recovery and Reinvestment Act of 2009 (ARRA), recently signed for into law unprecedented Obama, provides for unprecedented levels of investment in infrastructure, in infrastructure, research. While the government’s outlay of nearly $500 billion in stimulus research. While it offers offers many businesses the prospect of brighter economic days, it is important the prospect bofrighter days, it is important that the ARRA contains sweeping who receive those gross that it comes with or waste of covered funds, creation of public health or safety Among other risks, or things, laws or regulations relating to the grant of the sweeping funds. npreowtections for public and private Say) Protections for who blow the whistle on or waste coof vered creation of public provides that non-federal employers who receive risks, or violation stimulus of not retaliate against an employee for providing information that the relating to the employee grant believes to be evidence of: (1) gross mismanagement of a contract related funds. to the use of public funds; (4) an abuse of authority related to the cuosvee oref d funds; or (5) a violation of a law, rule, or regulation related to a contract or rgerlaantet d funds. Non-federal employers include all private employers as awse lsl tate municipal employers. other laws providing For example, Section 1553 establishes a wide range aofgencies, and courts to whom an employee can report allegations of forra aubduse, Accountability and Transparency Board, a state foerderal the employee’s supervisor, a court gorrand the head of a federal agency or their representatives, and even a omfe Cmobnegrress (something no other federal whistleblower statute has authorized bNeoftoarbel)y., report is a disclosure even when it imsade ordinary course of his or her duties. Littler Mendelson, P.C. • littler.com • 1.888.littler • info@littler.com Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=f1e7f4ea-a4f7-41fa-bb2f-c04cd45b382e® is published by Littler Mendelson in order to review the latest developments in employment law. ASAP® is designed to provide accurate and informative information and should not be considered legal advice. ™ Mendelson, P.C. littler.com 1.888.• i A S A P nfo@littler.com ® info@Under section 1553, a covered employee may not be “discharged, demoted, or otherwise discriminated against” in retaliation for making the protected disclosure. However, the statute does not define what “otherwise discriminated against” means. If that provision is ultimately interpreted according to the standard for “materially adverse actions” announced in the 2006 United States Supreme Court case, Burlington Northern v. White,1 then it will include any action that would dissuade a reasonable person from engaging in protected conduct. Following Burlington, courts have found that a wide range of actions qualify as “materially adverse” and constitute discrimination or retaliation even when they do not have a tangible economic effect. Even more disturbing, the Burlington standard expressly provides that the adverse action need not be an employment action, creating a myriad of potential new claims. In addition to creating significant new protections for employees, important issues that remain undefined by the statute are also likely to increase litigation. For example, section 1553 does not establish a statute of limitations. Also, unlike other statutes affording protections to employees, section 1553 does not impose a statutory cap on damages. Finally, section 1553 does not even define broad new concepts such as “waste,” “abuse” and “gross mismanagement.” These are new terms that find no real footing in established federal whistleblower statutes. Employees cannot waive the rights and remedies provided to them by section 1553. While it is common practice for employees to waive certain claims, such as discrimination claims, in exchange for severance or other benefits, an agreement to waive the rights afforded by section 1553 will not be enforceable. Agreements requiring the arbitration of disputes arising under section 1553 are also invalid. Investigation and Litigation Under Section 1553 Whistleblower claims under section 1553 will be administered by the individual agencies responsible for overseeing or distributing the covered funds at issue. An employee covered by section 1553 can file a claim with the inspector general of the government agency that has jurisdiction over the covered funds. The inspector general must then investigate the claim and issue a report or determine that the claim is frivolous within 180 days. A complainant has the burden of proof to demonstrate that the protected activity was a “contributing factor” in whatever reprisal he or she may have experienced. For an employer to successfully defend the claim, it must show by clear and convincing evidence that it would have taken the same action even in the absence of the protected disclosure. The head of the agency that has jurisdiction over the claim is responsible for deciding on the basis of the inspector general’s report whether there is a sufficient basis to conclude that the employer has engaged in impermissible reprisal. Any person aggrieved by the agency head’s decision may appeal that decision to the U.S. Court of Appeals in the jurisdiction in which the reprisal is alleged to have taken place. A complainant can also initiate a new civil action in a federal district court when: (1) the inspector general, in his discretion, discontinues the investigation; (2) the agency head issues an order denying relief on the grounds that the complaint is frivolous, does not relate to covered funds, or has been addressed in a separate agency action; or (3) 210 days have passed since the original submission of the complaint or 30 days have passed since the expiration of an extension of time. The relief available under section 1553 includes not only compensatory damages, but also reinstatement, back pay, repayment of benefits, attorneys’ fees, and an order that the employer take “affirmative action to abate the reprisal.” Taking a Proactive Approach to Potential Whistleblower Claims Retaliation and whistleblowing claims are one of the fastest growing areas of employment litigation in the United States today. In just the last five years, the state and federal governments have created a host of new laws to protect whistleblowers. This most recent legislation dramatically raises the stakes for any public or private employer who anticipates accepting stimulus funds. When it comes to preventing and addressing whistleblower claims, a strong defense is always the best offense. Below, are some steps employers should take. Littler Mendelson, P.C. • littler.com • 1.888.littler • info@littler.com A S A P ® be “discharged, demoted, otherwise discriminated disclosure. However, the statute does not define what “otherwise discriminated against” means. If that ipsr ouvltiismioantely interpreted according to the standard for “materially adverse actions” announced in the 2006 United States cSauspere, mBuer lCinogutortn Northern v. White,1 then it will include any action that would dissuade a reasonable person from engaging in cporontdeucctet.d Following Burlington, courts have found that a wide range of actions qualify as “materially adverse” and constitute doirs rcertimaliiantaiotino neven when they do not have a tangible economic effect. Even more disturbing, the Burlington standard expressly tphraotv itdhees action need not be an employment action, creating a myriad of potential new claims. to creating significant new protections for employees, important issues that remain undefined by the statute are also ilinkcerleya tsoe For example, section 1553 does not establish a statute of limitations. Also, unlike other statutes affording tpor oetmecptiloonyeses, “abuse” and “gross mismanagement.” These are new terms that find no real footing in established fwehdiesrtlaelblower statutes. cannot waive the rights and remedies provided to them by section 1553. While it is common practice for employees tcoe rwtaaiinv eclaims, such as discrimination claims, in exchange for severance or other benefits, an agreement to waive the rights saeffcotridoend 1 b5y53 will not be enforceable. Agreements requiring the arbitration of disputes arising under section 1553 are also invalid. and Litigation Under Section 1553 claims under section 1553 will be administered by the individual agencies responsible for overseeing or cdoisvtreibreudti nfugn tdhse at issue. An employee covered by section 1553 can file a claim with the inspector general of the government ahagse njucryis tdhiacttion over the covered funds. The inspector general must then investigate the claim and issue a report or determine tchlaaitm th ies within 180 days. has the burden of proof to demonstrate that the protected activity was a “contributing factor” in whatever reprisal hmea yo rh sahvee For an employer to successfully defend the claim, it must show by clear and convincing evidence that it hwaovueld the same action even in the absence of the protected disclosure. over the claim is responsible for deciding on the basis of the inspector general’s rwehpeotrhter basis to conclude that the employer has engaged in impermissible reprisal. Any person aggrieved abyg ethnecy decision may appeal that decision to the U.S. Court of Appeals in the jurisdiction in which the reprisal is alleged ttao kheanv eplace. A complainant can also initiate a new civil action in a federal district court when: (1) the inspector general, in his ddiissccroenttioinnu,es the investigation; (2) the agency head issues an order denying relief on the grounds that the complaint is frivolous, rdeolaetse n toot funds, or has been addressed in a separate agency action; or (3) 210 days have passed since the original souf bthmei scsoimonplaint or 30 days have passed since the expiration of an extension of time. back pay, repayment bofenefits, fees, and an order that the employer take “affirmative action to abate the reprisal.” to Potential Whistleblower Claims and whistleblowing claims are one of the fastest growing areas of employment litigation in the United States today. In jlausstt ftihvee years, the state and federal governments have created a host of new laws to protect whistleblowers. This most recent ldergaimslaattiiocanlly raises the stakes for any public or private employer who anticipates accepting stimulus funds. When it comes to aprnedv eandtdinregssing whistleblower claims, a strong defense is always the best offense. Below, are some steps employers should take. 2 ASAP® is published by Littler Mendelson in order to review the latest developments in employment law. ASAP® is designed to provide accurate and informative information and should not be considered legal advice. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=f1e7f4ea-a4f7-41fa-bb2f-c04cd45b382e® is published by Littler Mendelson in order to review the latest developments in employment law. ASAP® is designed to provide accurate and informative information and should not be considered legal advice. ™ Mendelson, P.C. littler.com 1.888.• i A S A P nfo@littler.com ® info@What Practical Steps Should Employers Prepare to Take? • Make sure you have a policy that includes prohibitions against discrimination and retaliation for reporting what employees reasonably believe to be wrongdoing of any kind – not just discrimination or harassment – and provide two avenues for reporting, one of which is outside of the employee’s chain of command. • Be sure that complaints and claims are promptly investigated by someone within or outside of the company who is knowledgeable about the subject matter of the complaint (e.g. finance, health, safety). • Educate managers on compliance with any laws, rules, or regulations relating to the use of government funds in addition to providing comprehensive training on awareness and prevention of whistleblower retaliation. Gregory C. Keating is a Shareholder in Littler Mendelson’s Boston office and is co-chair of Littler’s Healthcare practice group. Mr. Keating is the author of Retaliation & Whistleblowing: A Guide for HR Professionals & Counsel. Amy E. Mendenhall is an Associate in Littler Mendelson’s Boston office. If you would like further information, please contact your Littler attorney at 1.888.Littler, info@littler.com, Mr. Keating at gkeating@littler.com or Ms. Mendenhall at amendenhall@littler.com. 548 U.S. 53 (2006). Littler Mendelson, P.C. • littler.com • 1.888.littler • info@littler.com A S A P ® Should Employers Prepare to Take? you have a policy that includes prohibitions against discrimination and retaliation for reporting what employees rbeealiseovnea tbol ybe wrongdoing of any kind -not just discrimination or harassment -and provide two avenues for reporting, one of iws hoicuhtside the employee’s chain of command. complaints and claims are promptly investigated by someone within or outside of the company who is kanboowutl ethdeg esaubbljeect matter of the complaint (e.g. finance, health, safety). managers on compliance with any laws, rules, or regulations relating to the use of government funds in addition to cporomvpidrienhgensive training on awareness and prevention of whistleblower retaliation. C. Keating is a Shareholder in Littler Mendelson’s Boston office and is co-chair of Littler’s Healthcare practice group. Mr. Keating is the author A Guide for HR Professionals & Counsel. Amy E. Mendenhall is an Associate in Littler Mendelson’s Boston office. please contact your Littler attorney at 1.888.Littler, info@littler.com, Mr. Keating at gkeating@littler.com or Ms. at amendenhall@littler.com. 1 548 U.S. 53 (2006). 3 ASAP® is published by Littler Mendelson in order to review the latest developments in employment law. ASAP® is designed to provide accurate and informative information and should not be considered legal advice. Document hosted at http://www.jdsupra.com/post/documentViewer.aspx?fid=f1e7f4ea-a4f7-41fa-bb2f-c04cd45b382e

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

"My best business intelligence, in one easy email…"

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Privacy Policy (Updated: October 8, 2015):

hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.